OREANDA-NEWS. November 24, 2015. Fitch Ratings has been informed of a consent by the special servicer, LNR Partners, LLC, to permit the issuance of an \\$18 million preferred equity position in the current borrower for the largest loan, Ernst and Young Tower, in the transaction, Citigroup Commercial Mortgage Trust 2013-GC17 (CGCMT 2013-GC17).

The issuance of preferred equity for the Ernst and Young Tower loan, 10.7% of the pool, is considered a prohibited transfer under the original loan terms and Fitch has been asked to provide a rating confirmation.

Fitch believes the issuance of preferred equity will potentially cause additional stress at refinance. However, the subject loan's cash flow has improved since issuance due to additional leasing. Additionally, the loan has amortized 1.3%. Fitch believes that the additional risk to bonds in the transaction caused by the issuance of preferred equity on this loan is offset by the reduction in the loan's trust balance due to amortization and the improvement in property-level cash flow. Therefore, the issuance of preferred equity with respect to the Ernst and Young Tower loan will not cause Fitch to downgrade the bonds.

The current sponsorship of the property remains the same. There is also no impact on the property's current cash flow because the proposed preferred equity does not have a current pay feature. Additionally, the mortgage loan is in a full cash flow sweep for its remaining term. The preferred equity, including the accrued interest, is due one year to two years beyond the mortgage loan maturity. From the proceeds of the preferred equity, the sponsor will deposit \\$1.4 million into the leasing reserve. Approximately \\$9 million will be used to pay for improvements on the collateral or to reimburse the borrower for cash expenditures already made for leasing costs for new leases, and the balance, \\$7.6 million, will be used by borrower affiliates for improvements at an adjacent property, including adjacent public space, parking lots and river walkway, which serve as amenities to the subject collateral. The sponsor will also provide a new \\$9 million loan guaranty.

Fitch will continue to factor in the risk of additional debt when considering requests for ratings confirmations and will not hesitate to refuse to issue a confirmation if Fitch views the additional debt as increasing the credit risk of the bonds in question. Fitch has provided a rating confirmation in this case, but is not obligated to provide one; the provision of a rating confirmation letter is within Fitch's discretion. Fitch may provide public commentary on post-closing changes to alert investors to any potential additional risk.